Induced pluripotent stem cells (iPSCs) have similar properties to embryonic stem cells in terms of indefinite self-renewal and differentiation capacity. After in vitro differentiation of iPSCs, undifferentiated iPSCs (USCs) may exist in cell therapy material and can form teratomas after in vivo transplantation. Selective elimination of residual USCs is, therefore, very important. Prunellae Spica (PS) is a traditional medicinal plant that has been shown to exert anti-cancer, antioxidant, and anti-inflammatory activities; however, its effects on iPSCs have not been previously characterized. In this study, we find that ethanol extract of PS (EPS) effectively induces apoptotic cell death of USCs through G2/M cell cycle arrest, generation of intracellular reactive oxygen species, alteration of mitochondrial membrane potentials, and caspase activation of USCs. In addition, EPS increases p53 accumulation and expression of its downstream targets. In p53 knockout (KO) iPSCs, the EPS did not induce apoptosis, indicating that EPS-mediated apoptosis of USCs was p53-dependent. In addition, EPS was not genotoxic towards iPSCs-derived differentiated cells. EPS treatment before injection efficiently prevented in ovo teratoma formation of p53 wild-type (WT) iPSCs but not p53KO iPSCs. Collectively, these results indicate that EPS has potent anti-teratoma activity and no genotoxicity to differentiated cells. It can, therefore, be used in the development of safe and efficient iPSC-based cell therapies.